7 Ways Theft Will Wreck Your Rental Business

It’s every rental business owner’s worst nightmare: discovering that one or more of your rental assets has gone missing.

That’s exactly what happened to Sam Zahr, the owner of Detroit-based Dream Luxury Rental, earlier this year. “Imagine you’re looking at the camera and you see this happening to your business and your car’s worth hundreds of thousands,” Zahr said after the incident. “So, it wasn’t easy for the first five, ten minutes.”

With help from local authorities, Zahr was able to recover the stolen vehicles (though the thieves damaged several others in the process). But, he was luckier than many. 

Vehicle thefts have risen sharply over the last few years, going from 721,885 incidents reported in 2019 to 1,020,729 in 2023—an increase of more than 41%. The uptick has put car and equipment rental business owners on high alert, with many seeking out new and better ways to protect themselves.  

While most already have insurance to help cover theft-related losses and repairs, the cost of fixing or replacing the asset itself is just the tip of the iceberg. In this article, we’ll walk through all the ways lost and damaged rentals can eat into your profitability—as well as steps you can take to protect your business from these potentially devastating financial blows.

Hidden Cost #1: Time to File Insurance Claims

Anyone who’s ever had to deal with the administrative aftermath of a vehicle accident, theft, or other loss event can attest that navigating the claims process is anything but straightforward. Between paperwork, long hold times, and a never-ending series of back-and-forth phone calls, a single claim can wind up occupying several hours of your—or your staff’s—time. And as every business owner knows, time is money.

On top of that, it typically takes insurance companies 30–45 days to complete a claim payout once the paperwork is submitted—adding to the time your rental asset may be out of service (see Hidden Cost #4 below). 

Hidden Cost #2: Legal Fees

If you end up pressing charges and taking legal action against the perpetrator, then you’ll be saddled with the cost of hiring lawyers or investigators—which could run you upwards of $300 per hour. Plus, you may lose time—and thus, money—to the legal process if the case goes to court.

Hidden Cost #3: Inadequate Insurance Reimbursement

It shouldn’t come as a shock that insurance companies rarely cover the full cost of replacing lost or stolen vehicles and equipment—but that doesn’t change the fact that in order to return to full operational capacity, your business will need to replace what you’ve lost.

Reasons why insurance payouts may not cover the full cost of asset replacement include:

1. Depreciation: Insurance payouts are typically calculated based on current market value—not “new” purchase price. This is important, because vehicles lose 10–15% of their value per year on average—with higher depreciation rates during the first few years of their lifespan. (It’s also where Guaranteed Asset Protection, or GAP, insurance can be helpful.)
2. Deductibles: Almost every insurance company requires policyholders to pay a certain out-of-pocket dollar amount—called a deductible—before insurance coverage kicks in. This reduces the overall payout amount you receive.
3. Policy Limits: Many insurance policies cap the amount they will pay for theft claims, leaving you to make up the difference on your own.
4. Coverage Type: This goes back to the depreciation factor. While it’s possible to purchase replacement cost value (RCV) policies that cover the full cost of replacing a lost or stolen asset, many policies reimburse based on the depreciated value of the covered asset—or its actual cash value (ACV). And for older, high-mileage vehicles, the difference between the depreciated value and the current market purchase price can be significant.
5. Exclusions: Some policies exclude coverage for certain situations or types of vehicles. (This is why it’s important to ensure your existing policies account for theft.)
6. Condition of the Vehicle: If the vehicle had existing damage or was in poor condition at the time of theft, this could affect the payout amount.

For work vehicles, in particular, one crucial point to keep in mind is that most vehicle insurance policies do not cover unattached items kept inside of the vehicle (e.g., tools and other equipment). And while vehicle contents may be covered as part of a business owner’s policy or a general liability policy, this further complicates the claims process.

Hidden Cost #4: Time Out of Service

Out of all the financial losses associated with stolen or inoperable rental assets, time out of service is one of the most overlooked—and it’s not typically factored into insurance policies. When you suddenly lose a rental, you also suddenly lose the income you would have earned from that rental—and you might even lose entire contracts (for example, a construction job that you can no longer service due to the loss of an excavator).

This is why—especially in the case of theft—it’s absolutely critical to recover your asset as quickly as possible. Remember, when it’s not generating revenue, it’s costing you money.

Hidden Cost #5: Repairs

Even if you are able to recover a stolen vehicle or asset, it might not be in the same condition it was before—for example, it may have a broken window or collision damage. In this case, you’ll have to pay for repairs—and eat the cost of further time out of service.

Furthermore, if your stolen vehicle was recovered by the police, you may be responsible for impound fees. This could run you a few hundred dollars (though in some cases, you may be able to have these fees waived or covered by insurance).

Hidden Cost #6: Lower Resale Value

Again, just because you recover a stolen vehicle doesn’t mean the incident won’t end up costing you in the long run. Having a theft on record could affect the eventual resale value of your vehicle if—and this is a big “if”—the vehicle’s title is deemed no longer “clean.”

For example, if your vehicle isn’t recovered within the time period specified by your insurance—or if it is severely damaged upon recovery—then it may be labeled a “salvage vehicle.” And previously stolen vehicles with salvage titles can lose 20–40% of their original value. This is just one more reason why timely recovery of a stolen vehicle is absolutely critical.  

Hidden Cost #7: Loss of Potential Customers and Sales

In addition to causing termination of existing contracts, a lost or inoperable rental asset may cause you to lose out on future jobs or customers that you otherwise would have booked. These types of events can also damage your reputation as a business, leading would-be customers to look elsewhere for more trustworthy rental providers. In fact, more than 25% of a company’s market value is directly attributable to its reputation.

How it All Adds Up: Calculating the Total Cost of Rental Asset Loss

Now that we’ve laid out the biggest costs associated with rental theft, let’s run through some example formulas for calculating the total financial impact of a loss event. Keep in mind that every scenario is unique. These formulas are meant to give you a tangible idea of what a rental theft will cost your business, but actual costs may vary.

Cost Formulas

Based on the factors above, here are cost formulas for three different theft scenarios:

1. Rental Asset or Vehicle is NOT Recovered
2. Rental Asset or Vehicle is Recovered within Days/Weeks
3. Rental Asset or Vehicle is Recovered within Hours

First, here’s a breakdown of the variables used in these calculations:

1. Cost of Asset Replacement (CAR): The cost to replace the stolen vehicle or equipment at current market value.
2. Time Loss Cost (TLC): Estimated income lost due to the asset being out of service. This can be calculated as: TLC = Daily Rental Rate × Days Out of Service
3. Legal Fees (LF): Costs incurred if legal action is taken (e.g., attorney fees). This can be calculated as: LF = Hourly Rate × Hours Spent
4. Insurance Deductible (ID): The amount you must pay out-of-pocket before insurance coverage applies.
5. Repair Costs (RC): Any costs associated with repairing damage incurred during asset theft or recovery.
6. Impound Fees (IF): Fees for recovering the vehicle from impound, if applicable.
7. Resale Value Loss (RVL): Potential loss in resale value due to the vehicle being marked as salvage. This can be calculated as: RVL = Original Value × Percentage Loss
8. Customer Loss Impact (CLI): Estimated lost revenue from future bookings and potential damage to reputation, which can be calculated as: CLI = Average Expected Revenue per Customer × Number of Lost Customers
9. Insurance Payout (IP): What your insurance company ultimately pays for the claim. This amount is typically less than the cost of replacement, due to depreciation. 

Cost Formula: Rental Asset or Vehicle is NOT Recovered

Here, we will assume that the asset or vehicle is not recovered, meaning the business owner must replace it and go through the full insurance claims process to obtain coverage for the loss.

Total Estimated Cost (TEC) =

Cost of Asset Replacement + Time Loss Cost + Legal Fees + Insurance Deductible + Customer Loss Impact – Insurance Payout

Or, more simply:

CAR + TLC + LF + ID + CLI – IP

Example Calculation

Now, let’s apply the formula to a hypothetical theft scenario assuming the following values:

• CAR = $60,000
• TLC = $3,000 (15 days at $200/day)
• LF = $900 (3 hours at $300/hour)
• ID = $1,000
• CLI = $4,000 (20 lost rental days)
• IP = $42,000 (30% depreciation loss)

TEC = $60,000 + $3,000 + $900 + $1,000 + $4,000 – $42,000 = $26,900

In this example, the total estimated out-of-pocket cost of the stolen rental is $26,900.

Cost Formula: Rental Asset or Vehicle is Recovered within Days/Weeks

Here, we will assume that the vehicle is marked as “salvage” due to the extended length of time before recovery—thus decreasing the resale value.

Total Estimated Cost (TEC) =

Time Loss Cost + Legal Fees + Repair Costs + Impound Fees + Resale Value Loss + Customer Loss Impact

Or, more simply:

TLC + LF + RC + IF + RVL + CLI

Example Calculation

Now, let’s apply the formula to a hypothetical theft scenario assuming the following values:

• TLC = $3,000 (15 days at $200/day)
• LF = $900 (3 hours at $300/hour)
• RC = $500
• IF = $200
• RVL = $18,000 (30% loss on a $60,000 vehicle)
• CLI = $4,000 (20 lost rental days)

TEC = $3,000 + $900 + $500 + $200 + $18,000 + $4,000 = $26,600

In this example, the total estimated cost of the stolen rental vehicle is $26,600.

Cost Formula: Rental Asset or Vehicle is Recovered within Hours

Here, we’ll assume that in the case of a stolen vehicle, it is recovered before being marked “salvage” (and thus, losing resale value). We’ll also assume that because repairs are able to be completed sooner, the rental can resume being rented out sooner.

Total Estimated Cost (TEC) =

Time Loss Cost + Legal Fees + Repair Costs + Impound Fees + Customer Loss Impact

Or, more simply:

TLC + LF + RC + IF + CLI

Example Calculation

Now, let’s apply the formula to a hypothetical theft scenario assuming the following values:

• TLC = $2,000 (10 days at $200/day)
• LF = $900 (3 hours at $300/hour)
• RC = $500
• IF = $200
• CLI = $4,000 (20 lost rental days)

TEC = $2,000 + $900 + $500 + $200 + 4,000 = $7,600

In this example, the total estimated cost of the stolen rental is $7,600.

Again, these are just examples—and the values of these variables, as well as the variables themselves, may differ in your specific situation. But, it gives you a solid idea of how quickly the costs associated with rental theft can add up—and why protecting your business from these types of losses is absolutely worth the investment.

How to Protect Your Rental Business from Revenue Loss Due to Theft

To that end, the best way to protect your business from financial losses due to asset theft is to prevent it from happening in the first place. That means:

• Parking and securing vehicles and equipment in a safe, well-lit area when not in use.
• Investing in theft deterrents like video surveillance and security guards.
• Not leaving vehicles and equipment unattended for extended time periods.
• Establishing a policy forbidding customers and staff from leaving keys in the vehicle.

But, in the unfortunate event that your business is the target of theft, the faster you jump into action, the greater the odds of recovering your assets and minimizing damage—and thus, avoiding many of the costs summarized above. That means:

• Reporting suspicious activity and missing assets immediately—and providing as much information as possible to the authorities.
• Recording all pertinent information about your rentals somewhere you can easily access in the event of an emergency. This includes each vehicle’s make, model, color, license plate number, VIN, and any other details that may be helpful in finding and recovering the asset.
• Installing GPS tracking devices and other anti-theft technology—like ignition kill switch technology to stop thefts in progress. According to the National Insurance Crime Bureau (NICB), vehicles equipped with anti-theft GPS tracking systems have a 90% recovery rate in the event of theft—compared to 40–50% for vehicles without this technology.

Get proactive about theft protection with Trackhawk.

With more than 200 years of combined automotive industry experience, the team here at Trackhawk truly understands the importance of keeping your rental equipment and vehicles safe and operational. That’s why trust, reliability, and accuracy are at the center of our proprietary GPS tracking and asset recovery technology.

And the results speak for themselves. At Trackhawk, we:

• Alert our customers to security issues in as little as 10 seconds, because we know that when a theft happens, every minute counts.
• Offer proven kill switch technology to stop vehicle thieves in their tracks automatically with pre-set triggers and boundaries.
• Provide location details in real time—guaranteed.
• Track thousands of rentals across five countries.
• Boast a 4.8 Trustpilot rating.

But, don’t just take our word for it. Here are a few of the dozens of rave reviews we’ve received from happy Trackhawk customers:

“I picked up a Trackhawk GPS with the kill switch for my Dodge Challenger due to the fact that many of those are being stolen. The peace of mind that this brings is incredible…The tracking system is amazing and it definitely gives peace of mind knowing that I know where my car is at any time of the day.”
–Howard Wear

“The device is awesome! I give it five stars…We own a luxury car rental business. We had several people who had stolen our cars, which is the reason why we purchased the device. Now we will have peace of mind knowing that we have a killswitch that can prevent the thief from stealing our cars and not getting too far away.”
–Lisa Peterson

“Trackhawk GPS product is worth every penny. Trackhawk customer service tech line was very helpful and went the extra mile to get me going. Highly recommended product and company.”
–Greg K. Alejo

Stop losing sleep over rental theft. Download a free guide to calculate the true cost of theft. Ready to try Trackhawk GPS trackers and experience true peace of mind? Request Your 30-Day FREE Trial.